If you're into the details of a syndication, this page is for you. Below you'll find the nitty gritty details of how the process works and your role.
We work with partners to find great deals, negotiate the purchase, and finance the properties.
We look for growing markets in terms of population, jobs, income, home values, and rents. As they say, "a rising tide lifts all boats," which is why a growing market is so important.
We look for areas in which properties are valued for less relative to their income than other areas, i.e., their cash-on-cash returns are higher. One good indication of yield is the cap rates in those areas; the higher, the better in terms of potential cash flow.
A timeless - tried and true - asset class that provides a basic essential human need and is still in demand during market ups and downs. There are powerful macro factors that currently make apartments an exceptional investment with plenty of room for more profits.
First and foremost, millennials aren't buying homes at the expected rates. Meanwhile, retiring baby boomers are moving to urban apartments, creating additional rental market demand. The overall market is shifting to a rental environment, with renter rates significantly increasing over the last 12 years, as shown in the following graph.
Source: FRED Economic Data
Furthermore, the supply of new apartments is not keeping up with demand in most markets, and this is expected to continue for many years.
Source: FRED Economic Data
According to the National Multifamily Housing Council and the National Apartment Assoc., the US will need to build more than 4.6 million new apartment homes by 2030. It will take an average of 325,000 new apartment homes every year to meet that demand, but only 244,000 apartments were built from 2012 through 2016.
Part of that demand comes from:
We believe the multifamily housing market is resilient and has a very bright future. Everyone needs a physical place to live, and for both lifestyle and financial reasons, many Americans choose to rent an apartment instead of owning and maintaining a home.
Each purchase is a separate LLC with sponsors (General Partners, or GPs) and passive investors (Limited Partners, or LPs). GPs organize and control the syndication: find the property, secure financing, and manage the asset.
LPs provide the cash and receive an equity share along with cash flow distributions and profits in return for their investment. As an LP, you cannot make any managerial decisions, which protects you financially (though we take straw polls and seek feedback).
The LLC owns the property, and the GPs/LPs own the LLC. You can invest in your name, with an LLC, or with a trust account (like a Self-Directed IRA).
Investors become partners in the ownership of the actual property.
Get my 196-question vault across 8 due diligence sections to uncover areas of risk and make wise investments. Here are some of the top questions to ask:
Does it align with your financial goals?
Who is the deal sponsor (aka General Partner)?
Is sponsor's pitch and offering memorandum well researched?
Is it for accredited or non-accredited investors?
Is the property in a strong metro and neighborhood?
What is the risk vs. gain?
What class is the property?
Is it a value-add project?
What are the return metrics - cash-on-cash return (CoC) and average annual return (AAR)?
What are the tax considerations?
Is the General Partner planning on refinancing at some point?
Whare the General Partner's fees and splits?
When do cash flow distributions start? How frequently are they?
Do the subscription documents align with the deal?
Your money is held by a third party (called a custodian), but now the direction of investment is made by you. You can still invest in index funds, but you can also invest in partnerships, buy precious metals, buy real estate, and even lend money. There are some rules to watch out for - like you can't be directly compensated from the investment (so you can't buy a property that you self-manage), and you can't touch the money until you retire - but you still get the same tax benefit of not paying income tax each year.
If you have an IRA or 401(k) from a previous employer, rolling over to an SDIRA could be a great option.
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If your mortgage balance is less than 50 percent of your home's value, there is potential to unlock some of that equity with a new mortgage, second mortgage, or HELOC.
If you owned your home, or a vacation home, for more than 15 years, chances are you're sitting on some equity that can be used to grow your wealth.
Inheritance: A bittersweet occurrence, but perhaps we can help this final gift from your loved one better the life of your family.
Savings: Are you a well-disciplined saver but frustrated that you're not keeping up with inflation? Multifamily real estate provides above-average returns while hedging against inflation.
We oversee the property managers, who collect the rent from tenants and manage the property.
Acquire the asset: After finding a property and performing due diligence, money is raised from investors.
Refinance: After the value-add renovations are complete, the property will appraise at a higher value. A refinance is done to pull out some of the additional equity, and you can get a significant portion of your original capital returned early.
Hold: Hold the asset whole, collecting cash flow. We hire experienced property managers to manage the property and keep it running at peak efficiency. Investors are provided with quarterly performance reports and cash flow distributions from the profits. A common holding period for syndications is 5 years.
Sell: The renovations are complete, monthly revenues have increased, and the asset has appreciated in value. By returning your capital, it can be deployed into a new value add opportunity.
We do all the work while you sit back, relax and enjoy the benefits of passive income.
The middle class, upper class, and ultra-rich invest very differently. Edward Wolff's research shows how each class allocates their wealth, with exact percentages showing where they put their money.
The largest allocation for the ultra-rich, at 49%, is only 7.9% of the wealth allocated for the middle class.
Multifamily commercial real estate is an incredibly smart investment that gives you passive, tax-advantaged cash flow with limited exposure to market volatility and above-average returns hedged against inflation.
We make it simple for busy professionals to participate and accelerate their wealth and build generational wealth. The next step is to set up a brief call with us.
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Simple, honest answers because investing in syndications is a big deal that deserves thoughtful consideration.
Our typical minimum real estate investment is $50,000. But there are sometimes opportunities as low as $10,000.
You'll receive distributions quarterly from the property management company via ACH payments directly to your bank account. Usually, investors receive their first distribution 6-9 months after they fund the transaction.
We operate on a first-come, first-serve basis. When we get a property under contract, we'll let you know and give you access to the investor portal. Typically closing is 30 days after the due diligence period. You'll review legal documents and then wire the funds over. It's important to wire funds as soon as you decide to invest to have the best opportunity to be part of the deal. If you're using a Self-Directed IRA, review this article.
Three ways:
It's kind of like Kickstarter. Either we get enough and fund the purchase, or we don't. In that case, the General Partners will likely lose whatever earnest money they put down for the purchase. We intend to have more than enough commitments from Limited Partners, so this doesn't happen.
You don't need to, but our experience is that people we like tend to know other people we would like. :) So, if you know others who might be interested, we'd be happy to connect with them and share what we're doing. Anytime one of your referrals invests with us, we're happy to compensate you in the form of a marketing or consulting service, assuming there are no ethical conflicts.
Step one is to schedule a 30-minute call. We'll review your investment goals and make sure a partnership is the right fit for both parties. We can't wait to build a relationship with you! Schedule a Brief Call
The property owner - the asset-specific LLC - pays for maintenance and repairs, and the property manager will oversee the repairs. Investors fund a capital reserve as part of the purchase to pay for maintenance and repairs. When those funds get used, the account gets replenished from rent. Once the account is filled, the remaining funds are distributed to investors.
Our properties are insured with insurance benefits designed specifically for real estate investors to cover most natural disasters, vandalism, and even some maintenance issues. The asset-specific LLC will also be named as the "loss payee" on the insurance policy so that the insurance company can reimburse investors indirectly if something happens to the property.
Ideally, you're in for the longer hold period, but I get it. Life happens. We would need to find someone to buy your share of the property. Usually, there's a 5% fee to handle all the paperwork. Unlike stocks, it can't happen overnight. It's at least a 30-day process to find a replacement, get the paperwork drafted/signed, and file all the documents. If you think you'll need the funds within 5 years, this may not be for you.
The answer is a little bit of "it depends," but safeguards are in place to ensure you don't lose your investment.
When that happens (cause I probably won't be doing it when I'm 80), one of a few possibilities will happen:
I became interested in real estate in 7th grade and find it endlessly fascinating. If I could do any job in the world, this is it.
Fun story: The first day after I left HP - my first day "officially" on my own - it was New Year's Day, a holiday. But wouldn't you know it, a sewer line broke at a property. So, in the rain, I dug up the sewer line and made a temporary fix until I could coordinate with the city to replace it. I was all muddy & wet. I remember listening to Malcolm Gladwell's podcast and thinking: is this really what I traded my job at HP for? But when I got home, I was 100% energized! There are still days when I deal with literal and figurative poop, but for some crazy reason, I love it.
Each purchase is a separate LLC with General Partners (GP) and Limited Partners (LP). GPs organize the syndication: find the property, secure financing, and manage the property. LPs provide the cash and receive an equity share along with cash flow distributions and profits in return for their investment. As an LP, you cannot make any managerial decisions (though we take straw polls and seek feedback), which protects you financially.
The LLC owns the property, and the GPs/LPs own the LLC. You can invest in your name, with an LLC, or with a trust account (like a Self-Directed IRA). Talk to your tax or financial advisor about which makes sense for you.
As a Limited Partner of an LLC, you cannot make any managerial decisions (though we take straw polls and seek feedback). Therefore, you're only liable for business debts up to your initial investment.
You are liable for paying your taxes (on income received). We'll provide a K-1, but you'll want to talk to your tax advisor to estimate how much you'll want to save for taxes.
Yes. Set up a call first; We can walk you through an example and share it with you.
Step one is to schedule a 30-minute call. We'll review your investment goals and make sure a partnership is the right fit for both parties. We can't wait to build a relationship with you! Schedule a Brief Call